The uncertainties in the global economies and the rampant inflation in developed countries have also changed the landscape of wealth management and investing. It compelled individuals searching for a decent place to harbor savings to alter their approach to be more cost-efficient.
In 2020, the Investment Company Institute conducted a survey indicating the substantial decline in the expense ratio of mutual funds over two decades. In absolute figures, the expense ratio of mutual funds has plummeted by 50 basis points on average.
This trend was measured across all types of mutual funds. What’s more interesting is that the researchers found a simultaneous increase in their overall volume.
In a nutshell, it displays that the expense ratio of actively managed funds has equalized with the costs of the Index ETFs, which are historically considered to be passively managed assets. Which made professional portfolio management way more affordable for the retail investors.
Considering the ongoing uncertainties in the global economy and the geopolitical tension, we can foresee this trend will only get stronger over the following years.
In conclusion, the times of economic turmoil bring investing opportunities as well. It’s crucial to keep your finger on the pulse and your eyes open.
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